“Foxconn Technology Group, the world’s biggest electronics contract manufacturer, has agreed to assemble cars for electric-vehicle startup Fisker Inc.,” WSJ writes.
Why It Matters: It’s a notable snag for Foxconn, which already assembles the Apple iPhone. The deal signals the electronic manufacturer’s enthusiasm to get involved in the automotive sector; it’s been looking to “diversify beyond its core business of contract manufacturing for electronics.”
- Foxconn and Fisker have “signed a memorandum of understanding to jointly produce more than 250,000 vehicles a year.”
- Through the arrangement, Foxconn would make Fisker’s second vehicle, “a higher-volume electric car that the carmaker aims to start building in the fourth quarter of 2023.”
- Foxconn would build the vehicle on its proprietary underpinnings and it would be sold in North America, Europe, China and India.
Trend Watching: A deal like this isn’t uncommon. “In recent years, some electric vehicle startups like Fisker have been focusing on designing cars while outsourcing vehicle production, in a challenge to the traditional business model in the automotive sector, in which established carmakers designed and produced their own vehicles.”
- A wave of tech companies is trying to partner up and enter the space. Apple had reported talks with Hyundai about a potential deal but talks have since broken down.
For Foxconn, it’s the first time it will actually manufacture vehicles and tie-up with a U.S.-based electric vehicle firm.
- It also has agreements in place to work with Stellantis N.V. and China’s Zhejiang Geely Holding Group.
The Takeaway: Fisker began trading in October after going public through a SPAC. Its stock finished Monday at $16.29. “The company, which has told investors it expects its first revenues in 2022, is set to update investors on the results of its first quarter as a publicly-traded company after Thursday’s close.”
I’m not quite sure how I feel about applying the consumer electronics supply chain to automobiles. It might work for Fisker, whose Ocean is priced starting at $37,499 and aimed closer to the economy segment than the luxury one.